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Terms in this set (17)
when a country, or person, can produce more than another. They can simply make more
when a country has a lower opportunity cost in producing something. The country with the comparative advantage should produce that product and trade for what they need (or what they can't produce)--Ghana-cocoa
Balance of Trade
imports minus exports. The US has a negative trade balance. We import more than we export which means more money leaves the country than comes into the country.
things that make it difficult to trade. Generally intended to help domestic industries
4 examples of trade barriers
Tariffs, Quotas, Embargoes, Subsities
taxes on imported goods
Limits on the amount of goods that can be imported into a country
Stopping trade with a country or of a certain item (oil embargo from Iran)
gov't payment to an industry, trying to make those industries competitive (to farmers so we can buy crops grown in US at reasonable prices)
Free Trade Agreements
taking off trade barriers between countries. Makes it easier to trade goods between member countries
North American Free Trade Agreement -between US, Canada and Mexico
European Union -free trade between member European Countries
Association of Southeast Asian Nations-free trade between SE Asian countries
the price of one nation's currency in terms of another nation's currency (travel to Mexico and use dollars to buy pesos)
Flexible exchange rate
exchange rate changes according to supply and demand principles. When countries buy more of our products, the value of the dollar against their currency should be higher
Strong dollar means...
our exports become more expensive and foreign countries buy less of our items. But we buy more of theirs. Hurts our exports
Weak dollar means...
It is more expensive for us to buy products from other countries
THIS SET IS OFTEN IN FOLDERS WITH...
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